Archive for the ‘yield management’ Category:
Code Sharing For Private Air Service
Carol Pucci from Seattle Times recently wrote this article about her experience with airlines that code-share:
“With more airlines marketing each other’s flights as code shares, it’s getting harder to figure out who’s actually doing the flying. It also makes it a bit harder to find the best price. Code shares are marketing alliances that allow airlines to sell seats under their own name for flights operated by a partner airline. The airlines share in the revenues and passengers can earn and use their frequent-flier miles on either carrier.”
The irony is that on-line travel agents started a price war that has eliminated the incentive for airlines to distinguish themselves on “service” or even distance. This relieved them of the responsibility to excel. The underlying assumption imposed on the passenger is that all airlines are equal and all flights are the same – until they are not. For example: Air France and Delta are code share partners:
Carol further writes: “Air France was selling a Seattle/Zagreb (Croatia) round trip, with a connection through Paris, for $1,214 versus $1,408 on Delta for the same flights, a savings of $194″.
The law of one price
The problem with code sharing is not that you fly on the other partner’s aircraft, the problem is that the price is does not correlate with the exact same product, rather, it varies by whom you buy the ticket – that, by any definition, is broker’s world.
Private air service carriers and charter operators currently suffer from an extreme form of broker’s world that not only prevents carriers from code sharing, they also keep prices unpublished so the customer has no idea what they are paying for.
Of Brokers and Fixers
Imagine if Air France and Delta and United all had to operate different planes and there was no way for travelers to compare compare prices. Instead, a group of brokers could manipulate supply and demand to maximize their own profits. So for example, if the airplanes fly 1/2 empty, then brokers could charge double the airfare. Obviously, this is an extremely inefficient way to operate an air service industry.
Fly Social in more ways than one
Social Flights is a platform that accommodates code sharing among many partner air service operators while also standardizing the cost of flying on a per-mile / per-time basis. Social Flights performs the same yield management operations for a diverse inventory of private jets as the commercial carriers perform for their shared fleets.
The Social Flights platform permits the private air service operators to sell charter lift on a per-seat, per-leg basis. Instead of generating dead heads (empty legs) operators can code share such that every flight is a primary leg. Operators who are closest to the passenger will inherently be lower cost since a “re-positioning” fee would not be needed. This alone may cut the price of private travel by 50% (half the cost without dead/reposition fee) while also increasing operator revenue by 50% (by doubling the size of the market).
You can call it a code-share or you can call it a ride-share, but Social Flights calls it a breakthrough in air service efficiency.
Private Aviation Is Leaving Money on The Tarmac
From Analytics Magazine
Airline accountants and statisticians perform two extremely important functions. The first is called “Yield Management” and the second is called “Fleet Management”.
Yield management is how airlines put the right customer in the right seat at the right price. Fleet management assigns the right airplane to the right time table at the rights price. This is the important integration for all airlines.
The Easy Way Outbound
Most charter brokers do not bother with yield management or fleet management. They hammer hard on sales; they scope out the wealthiest passengers and find them the jet that delivers (to the broker) a profit they can sell up to the passenger for fast turnaround. They neither expand the market to more people nor help existing clients share a plane among each other.
With proper yield management, a private ticket could “value out’ the same as a premium class commercial fare. The North American premium class market accounts for 6.6% of all airline traffic and 22.7% of all commercial airline revenue (IATA 2010) of 147 Billion dollars. Premium travel is a 30 Billion Dollar Industry. General Aviation Manufacturers Association (GAMMA) shows total billing of general aviation aircraft of $7.3 billion.
How to Double Your Market
Applications of yield management can easily double the number of passengers that would take a seat on a private aircraft. Meanwhile application of fleet management can nearly double the amount of available revenue seats; after all, 40% of private flights are empty.
Today’s private aviation industry has both a fragmented supply and a fragmented demand. Operators do not communicate with each other, they do not share legs, They do not share inventory, they do not allow customers to talk to each other or share a jet between them. Even the taxi industry lets people share a cab. As long as the industry is fragmented, investors, hospitality partners, and most importantly, passengers, will look elsewhere for their investment in time and money.
New Features At Social Flights
Social Flights offers instant quote feature that allows passengers to immediately cost out the price and flight time for a private aircraft between any two airports in the US. Social Flights then helps passengers communicate with each other so that they know the true cost before they are accosted by a broker. Social Flights publishes a wide range of aircraft and airports where they may fly.
Social Flights builds alliances and partnerships with owners, operator, passengers, hospitality, and support services so that everyone can see what everyone else is doing and price accordingly. Social flights posts empty legs, lists events in various cities, and refers service providers that can help out passengers on the ground
Watch us Grow
Keep in mind that each of these features represent initial applications of both yield management and fleet management. This is a huge innovation for private aviation. As the dataset increases and becomes integrated, we will begin performing essential calculations that the airlines use to manage their fleets.
Bring your information and inventory to us and let us combine it into new markets and customers – there is a lot more going on at Social Flights than many people realize.